"Oh, you trade options? I did for a while too. Made a good amount of money, but then gave it all back."
I've heard that more times than I can count.
And it will continue to happen. Someone who is new in the markets gets on a winning streak because a market is trending. Soon enough they're bragging to their coworkers about the abnormal returns they're getting in the market, and are planning their next car purchase with the profits.
All of a sudden, something stops working. They get frustrated, go on tilt, and then wipe out their profits.
Successful financial speculation is not about what you do when you are winning, it's about what you do when you are losing.
Financial losses are a part of trading, and can be considered an obstacle to building wealth. But through those obstacles you'll actually find success.
Just Released: Obstacle is the Way
This book is about looking throughout history for examples of how very successful people overcame some terrible things... and that those "obstacles" helped to define them and create their success.
Trading and investing is an iterative process. If you lose money, you need to figure out why you lose money, otherwise you'll make the same mistakes.
Here's an example from my trading methodology: I never sell bull put spreads on the first ugly day lower. I used to get very eager to "fade" the market once it had a nasty selloff, but I now know that volatility begets volatility and so I can wait a little longer for better trades.
Why you should read this book: by looking into the past and seeing how great people acted when they hit a brick wall, you will be able to apply some of that methodology to your trading and investing.
Examples from the Book
Follow the Process. Coach Nick Saban teaches his players to not focus on the next game, the SEC title, or the national championship. Just focus on the next play.
How this applies: no matter if your previous trade was a win or a loss, no matter how badly you want to retire early, you can only focus on the trade that is in front of you.
Use the Obstacle As Opportunity. The German Blitzkrieg was a tactic that involved very fast troop and armor movement into a territory, keeping the allies on their heels. Eisenhower used that to their advantage by allowing the first column through and then attacking at the sides. This counter helped him to win the battle of the Bulge.
How this applies: algorithmic and high frequency traders can devestate your short term trading, because they will run your stops and front run your trades. Counter that by recognizing the "obvious" stop loss areas and buy the flush and reversal instead of the support level.
Love Everything That Happens. In the middle of growing his business, Thomas Edison's factory caught on fire. Instead of freaking out, he invited everyone out to watch it burn as it would be a spectacular sight. He then rebuilt it from the ground up and made a ton of money.
How this applies: your outlook and happiness need to be independent of the outcome in your trades. Viewing losses as an opportunity to get better will help your growth more than anything else.
Getting the Book:
Pick it up on the Kindle [update: if you pick it up today (May 15th) it's only 4 bucks]
Win a Signed Copy
Here's the deal. I've got an extra copy signed by Ryan that I'm giving away to one lucky reader.
All you have to do is join the IWO Facebook Page.
On Friday, May 23rd we will have a random drawing and one of our facebook fans will win the copy.